This blog will highlight key EPM market trends, recent events and other news of interest to our field, customers and partners.

Wednesday Feb 25, 2015

There are so many wonderful business tools and methodologies out there that can help us monitor, analyze, set strategy and improve efficiency, etc., but can they all work together? Where do they connect? In this post I will focus on how EPM and Six Sigma intersect.

Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process – from manufacturing to transactional and from product to service. The principals of Six Sigma were originally were created by William Deming in his rebuilding of Japanese manufacturing industry post-WWII by applying statistical methods to measure, test, and improve design, quality and service. By the 1980s, Six Sigma management techniques had been adopted more broadly for business process improvement and U.S. manufacturers such as Motorola, GE, Honeywell, and Dow competing in the global market. By the 1990s, Six Sigma transcended manufacturing as Ritz Carlton Hotels applied total quality management and process improvement techniques to delivering five-star luxury service for their guests and were recognized twice with the Malcolm Baldrige National Quality Award by the U.S. Department of Commerce.

The Six Sigma method, when employed properly, aligns your organization and processes to achieve efficiency and a standard quality (whatever the standard should be).

Enterprise Performance Management is focused on

* Setting strategy for the company, including - Which products/services should be the focus in order to be competitive - Who are the desirable customers - Which markets to play in - What are the short and longer term goals * Setting budgets, simulating forecasts* Monitoring strategy execution* Adjusting the strategy based on outcomes* Reporting on the financial outcomes* Repeat

To be very successful, the two methods should be employed together – EPM setting the desired strategy, Six Sigma providing the optimal processes and products/services to achieve the strategy; Six Sigma reporting on the outputs of the company and EPM reporting on strategic and financial outcomes.

Six Sigma’s job is primarily focused on lean operations, eliminating waste and inefficiencies from monitoring feedback to knowing what’s working and what’s not, and when to ask what-if, making adjustments based on that feedback for continuous improvement, etc. – where Enterprise Performance Management has both an internal and external view. It is simply not possible to set your near or long term strategy successfully without having an understanding of the external markets, external customer sentiment, competitors’ movements and of course R&D on new products and services.

Without getting too philosophical, EPM typically functions assuming products and services are being made well and focuses on setting strategy and executing the strategy. Six Sigma focuses on making the products and services well and assumes that they are the right products and services to be made and delivered. In my opinion, they need to work hand-in-hand to successfully achieve your strategy.

B/E Aerospace is the worldwide leading manufacturer of aircraft passenger cabin interior products for commercial and business jet aircraft. The company, which was growing rapidly through a series of acquisitions, decided to adopt Oracle Enterprise Performance Management solutions to drive innovation and organizational change.

They took a three phased approach:

*PHASE I – Prove the value of the Hyperion solutions to senior management by leveraging the applications to meet company goals*PHASE II – Build a superior financial end-to-end solution for monthly, quarterly, and annual reporting*PHASE III – Build scalable daily financial reporting & analysis applications in order to make better decisions faster

In just nine months, the company completed a full-scale implementation that was delivered on time and under budget. As a result, B/E Aerospace has reduced by 80 percent the amount of time it takes to mine data from more than 30 sources. And the business can also acquire new companies and integrate their financials in three to four weeks instead of six months—dramatically speeding assimilation and supporting their acquisition strategy.

Wednesday Jan 08, 2014

Happy New Year!Organizations spend way too much time arguing about whose numbers are right, where they came from, and what they mean, rather than spending time discussing what to do about them. I had the pleasure of interviewing book author and consultant Ron Dimon, Enterprise Performance Management Advisory Services Partner at CheckPoint Consulting – an Oracle Platinum Partner – during a Podcast, and he provided some interesting insights into this topic.

Ron and I have been involved in Performance Management in one way or another since about 1999 and it amazes me that organizations today still rely so much on spreadsheets to do their planning and forecasting, profitability analysis, and even to record and report their financial and operational results. But, I am hopeful, as many companies and institutions now embrace the tools and processes of Enterprise Performance Management (EPM), that this will change, turning performance management into a discipline and a competitive advantage.To listen to the entire Podcast, click here.I asked Ron to give his point of view on why people are still uttering “Why are my numbers different from yours?” With all the technology and systems we have now, why is this still an issue for many organizations? He told our audience that he believes much of the issue can be attributed to spreadsheets. “While great for some things, they were never meant to be collaborative, controlled, enterprise-wide consolidation and reporting engines or reporting systems. We have grown to rely on them, because they are pervasive and so easy to set up.” Ron explained that it is relatively easy to whip up a customer profitability spreadsheet, for example, in less than an hour. You just need to collect the sales and expense numbers, take a stab at indirect costs and voila! The problem, he suggested, starts after the report is set up and we need to share it, compare actuals to forecast, or include some historical trend data. Ron explained that, “When Finance gets a look at the spreadsheet, they have to reverse engineer it and will probably quickly find that my basis for allocating expenses is wrong, or I haven’t taken into account commission splits, or I’m not including a foreign subsidiary of the customer in the sales results…the list goes on and on.”So how can this be corrected? Ron talked about a way of still using Excel to create easy, on-the-fly reports – but rather, using Excel directly connected to the central repository of data to ensure that everyone creating reports is starting from the same set of data. The Oracle solution he has used for this is called Oracle Hyperion SmartView for Office and is part of the Oracle EPM System. Because the spreadsheet is essentially connected to the underlying central repository of the EPM system, there is less time spent arguing about why numbers are different.So is Oracle Hyperion SmartView for Office the answer? Does it solve the data problem all by itself? Ron explained to our audience that SmartView is the window to all that data; it’s one way to access it. But how and when the data gets into the central repository, and how it’s organized and transformed once it gets there requires an Enterprise Performance Management System (EPM). Oracle’s EPM system is both a collection of tools and a group of processes that govern how your data, especially financial data, is recorded, reported and used. Ron explained that an EPM profitability application, like Oracle Hyperion Profitability and Cost Management (HPCM), is a much more disciplined way to truly determine customer profitability – unlike the spreadsheet example mentioned previously. Instead of the finance person making up formulas, allocations, and deciding what is included in that customer number or not, HPCM does it for you. So now you CAN spend more time on what do to with that customer: pay more attention, adjust prices, offer new services (or even fire them!) – and much less time arguing about why my numbers are different than yours.

To listen to the entire Podcast, click here.To learn more about Oracle’s Enterprise Performance Management solution click here, and to learn more about HPCM, click here.

Friday Dec 20, 2013

As the year winds down, I wanted to share some of the highlights from EPM in 2013 and give a sneak peak about where we’re going next year. 2013 was a busy year with new product developments, new research studies, as well as customer events like Oracle OpenWorld. Let’s look back at some of these happenings and their associated blog posts.

New Product Developments Early in 2013, we announced a new release of Oracle Enterprise Performance Management with new integrations and product capabilities and updates to user experience that help companies to Unlock Business Potential – by unlocking business potential, companies are able to drive to the desired business outcomes of Aligned Objectives, Accurate Forecasts, Confident Close and a more Accountable Enterprise.We also released new product modules, including Oracle Hyperion Tax Provision to help with aligning tax information and financial reporting, and Oracle Data Relationship Governance for improving financial master data governance and managing change. In addition, we certified Oracle Hyperion Planning and Oracle Hyperion Profitability and Cost Management on Oracle Exalytics In-Memory Machine to help organizations Plan at the Speed of Business. For the sixth consecutive year, Gartner recognized Oracle as a Market Leader in its 2013 Magic Quadrant for Corporate Performance Management Suites report. In this year’s report, among the market leaders, Oracle is positioned with the highest ability to execute and the strongest in completeness of vision.New ResearchWe conducted several interesting research studies in 2013. Over the past several years, as we have gone through and emerged from the Great Recession, the role of the CFO has transitioned to one of catalyst for change. New technologies and shifts in skill sets are also contributing to this changing role. To understand these issues more deeply, we partnered with Accenture and released new research about the CFO’s changing role from financial overseer to corporate strategist and change agent.To learn more about how Oracle customers perform Business Analytics processes (which includes Enterprise Performance Management, Business Intelligence and more), we launched the Oracle Business Analytics Customer Value Index (CVI) program in 2011, through which we collect valuable business process information from our customers. The EPM Blog featured some compelling results from the CVI around Enterprise Planning, Budgeting and Forecasting Processes.Customer Events and Videos One of the highlights of the year was Oracle OpenWorld, and winning the America’s Cup during that week certainly added to the excitement! The Business Analytics program this year was our strongest ever, with over 200 EPM, BI, Analytics, Big Data and Exalytics sessions delivered by Oracle, our customers and partners. We had the opportunity to catch up with a number of these customers and partners after their sessions, and you can view the interviews here. In one of our blogs about Scorecards, we featured forward-looking DC Courts and their process for managing strategy and KPIs. DC Courts are making some great strides in setting strategy and executing on it, and are really setting the bar for other US Courts. On the topic of Profitability and Cost Management, we interviewed Ida Quamina of Oracle about the great strides being made in mastering the cost of Higher Education, and how these institutions can now address the issues of low or no visibility into individual programs, degrees and course costs, or the cost per student.Next up – Cloud and Mobile!As we head into 2014, there are many exciting developments in store, and you can expect to see us talk a lot about Cloud and Mobile technologies next year. Our blog called, “Taking your Business Scorecard Golfing” is just a preview. Wishing you a very Happy Holiday and New Year!

Wednesday Aug 28, 2013

Oracle OpenWorld 2013 is rapidly approaching on September 22nd when we take over the city of San Francisco for five days. The Business Analytics program this year is our strongest ever, with over 200 EPM, BI, Analytics, Big Data and Exalytics sessions delivered by Oracle, our customers and partners. We'll also have Hands-on Labs, Theater sessions, 23 demo pods dedicated to Business Analytics products, and more than 30 partners exhibiting their solutions.

So what's hot in Business Analytics at OpenWorld 2013? Here are some of the "can't miss" sessions at this year's conference:

+ Monday Keynote: Transforming Business with Big Data and Analytics, led by Oracle President Mark Hurd, will discuss how to harness the value of big data. You will hear about crafting an IT strategy and leveraging big data to make decisions about business operations and products and services for transforming your business.

+ The EPM and BI General Sessions, led by SVP of Product Development, Balaji Yelamanchili, will highlight the latest innovations and product directions for Oracle EPM, BI and Analytics. Both sessions are scheduled on Monday, September 23.

+Customer Success: EPM on Oracle Exalytics. In this session, customers present case studies of how they have deployed Oracle Hyperion EPM applications on Oracle Exalytics and the benefits they have achieved, including extreme performance and scalability, all at a lower total cost of ownership than traditional systems.

+ New: Oracle Planning and Budgeting Cloud Service. Oracle Planning and Budgeting Cloud Service is the first of Oracle's EPM applications to be offered as a public cloud service and makes it much easier for businesses of any size to deploy a world-class planning and budgeting solution in a matter of weeks. Learn about this new offering and hear about early customer experiences.

+ What's New with Oracle Exalytics In-Memory Machine? Attend this session to learn about the latest and greatest in the hardware and software evolution of Oracle Exalytics In-Memory Machine. Also learn how customers have obtained value from Oracle Exalytics and listen to a customer case study.

+ Oracle Endeca Information Discovery: Customer Panel. This session features a panel of customers that have adopted Oracle Endeca Information Discovery and achieved exciting results. The customers' stories span various industries and demonstrate the broad applicability of data discovery tools and the competitive advantages customers can realize with Oracle Endeca Information Discovery.

+ Customer Panel: Real-World Value with Oracle Business Intelligence Applications. This session features a panel discussion that presents customer perspectives and best practices for implementing Oracle Business Intelligence Applications with Oracle E-Business Suite; Oracle Fusion; Oracle's PeopleSoft, Siebel and JD Edwards EnterpriseOne product families; SAP; and other application environments.+ Oracle Fusion Middleware: Meet This Year's Most Impressive Innovators. In its seventh year, the Oracle Excellence Awards for Oracle Fusion Middleware Innovation honors organizations from around the globe that are using Oracle Fusion Middleware to achieve significant business value. Attend this session to learn how leading-edge Oracle customers are successfully transforming their organizations with Oracle Fusion Middleware technology, including Business Analytics.

Tuesday May 28, 2013

As we look at the enterprise performance management (EPM) market, it’s clear that the fundamentals of EPM haven’t changed in the last 5 – 10 years. EPM is still about linking strategies to plans and execution, monitoring financial and operational results against goals, and applying analytics to understand key trends, make better decisions and drive enterprise-wide performance.What has changed is the world that we operate in. Although economic growth is slow, business cycles are faster so planning and forecasting needs to be more frequent. There’s more data available to analyze and leverage for planning and reporting – both internally and externally generated. Stakeholders have higher expectations. That includes external stakeholders who want more quantitative and qualitative disclosures about the organizations they are investing in, as well as internal management stakeholders who are demanding more frequent insights into financial and operating results. Even the workforce has changed, for instance Millennials (those born between 1980 and 2000) were raised on technology and have less patience for systems that are outdated or don’t respond quickly. In addition, technology is changing with the shift to Cloud, Mobile and Social computing. These new technology enablers that are available today create many opportunities to drive innovation and improve efficiency if leveraged correctly. So while today’s market presents a number of challenges to achieving the goals of CEOs and CFOs, there are also opportunities to unlock the potential of their organizations to drive profitable growth. These include:-Eliminating or investing more in under-performing products-Putting more focus on under-served customer segments-Better utilizing existing staff and capacity-Putting the excess cash on the balance sheet to work – investing in new markets, products, and services-Creating more efficient business processes and reducing IT complexity to reduce costsMany organizations are finding that an integrated EPM platform can help them break down the barriers to success, linking business goals to results and unlocking business potential. With a world class EPM platform organizations can deliver the desired outcomes needed to succeed in today’s market; Aligned Objectives, Accurate Forecasts, Confident Close and a more Accountable Enterprise. Plus they can address the needs of Finance, IT, as well as line of business managers to ensure more consistent decision-making.To learn more about how an integrated EPM platform can help your organization unlock its business potential, download our new white paper: Enterprise Performance Management – Unlocking Business Potential. Also, learn how the latest release of Oracle Hyperion EPM helps organizations unlock their business potential, here’s a link to the press release.And for more general information about Oracle Hyperion EPM please go to www.oracle.com/epm.

Tuesday Apr 16, 2013

Oracle has released another interesting Podcast – this one is about how Oracle Scorecard and Strategy Management can help you drive behavioural change and improvement at the same time by using metadata that actually matters.

I had the pleasure of interviewing Jacques Vigeant, Product Strategy Director for Oracle Business Intelligence and Enterprise Performance Management and Oracle Scorecard and Strategy Management (or OSSM) about this subject.

After covering the basics about what a scorecard is and how it differs from a BI system or dashboards, we went on to discuss how scorecards should traverse dimensional structures, not just go up and down the hierarchies (like a typical BI system does) but also jump from one hierarchy to another to tie important data together.

Then we got to the heart of the Podcast – metadata that really matters. Jacques told us why accountability is so important – understanding WHO is under or over performing and HOW that performance relates back to the organizational strategy is key to pushing strategy forward. It is difficult to modify behavior if accountability is not included.

Jacques further explained that traditional BI metrics are typically focused around aggregating metadata along a single hierarchy. For example, we all know intuitively that a very high attrition rate in a company can impact the profitability of the company.Traditional BI metadata focuses on aggregating metadata for HR attrition rates by HR dimensions, like attrition by department or region, but in this example, there is still a chasm between the HR data and financial data. Oracle Scorecard and Strategy Management (OSSM) enables you to draw relationships between your measures that are not necessarily based on aggregate tables or dimensional hierarchies – rather by business insight. You can literally drag and drop scorecard metrics on top of each other to get a better snapshot of what is going on. Jacques provided the following example, “Let’s say my attrition metric has an impact on my employee effectiveness metric, which has an impact on employee productivity, productivity has an impact on cost, and cost has an impact on profitability. You can drag all of these metrics on top of each other to get a whole company understanding of the impact of attrition rate on profitability”. This is new insight about the relationship. Once we understand this relationship, there is now a financial basis for management to ensure that the attrition rate stays within acceptable parameters – which can lead to a change in management behavior.

How does this type of insight help? Jacques explained that OSSM provides a set of metadata that is actually captured by the user using the system, providing new business insight. As more users use the system you are gaining more and more business insight. You get a network effect of new and better business insight as more people use the scorecard tool. This is not the same kind of metadata as traditional metadata that simply describes the existing dimensions.

Near the end of the Podcast Jacques also told us more about how the use of metadata that matters (including accountability) with financial objectives and data and operational metrics and data, can all roll up into the strategy tying everything together. The ability to keep the data current enables users to get a really good picture of the state of the strategy at any time, and which elements are most important to monitor to move the strategy forward. There are really great visual diagrams within OSSM that help you to literally see what is happening.

Jacques provided other interesting examples and useful information about metadata that actually matters in scorecards and how it can help encourage organizational change during the Podcast. I encourage you to listen to the entire interview.

Monday Mar 25, 2013

I recently interviewed David Jones, Director in PWC’s Consulting Services EPM Practice, and Simon Kenney a Senior EPM Consultant also from PWC, in a podcast about their successes in enterprise planning implementation and their research on finance effectiveness.

Initially, we discussed the research they have been conducting around planning and forecasting effectiveness; they call it the Finance Effectiveness Benchmark. For 2012, some issues were consistent with previous years. Planning, budgeting and forecasting is taking too long to pull together, it’s still too manual and requires too many resources or effort to get it done. But the interesting headline this year is that 80% of the respondents declared that the accuracy of their forecasts is critical to the running of their business, but only 45% said that their forecasts were actually reliable. This result is very concerning as this deficiency will prevent companies from making the right critical business decisions.

So what are the causes of this large deficiency?

According to Simon, a lack of integration across the entire planning process – front office to back office is a key issue. The business functions are just not engaged enough as the forecasting is mostly finance led. Sales and marketing are essential to any forecast, but they are often not engaged properly. Ultimately, those that generate the opportunities and the revenue need to be involved with the forecast.

No wonder the forecasts are not accurate!

How do companies to fix this deficiency and move to an integrated more inclusive world of forecasting? Simon suggested the following three steps are a good start.

Step 1: Identify why the forecasting process is failing (Is each function independently running their own processes? Is there a lack of clearly defined accountabilities?)

Step 2: Determine if/when the company is ready to integrate their processes. (Does it have the required level of sponsorship in place to move to an integrated planning process? Are the functions prepared for change?)

Step 3: Define a blue print or target “n” state (Design the integrated process. Determine which technology can help support the new integrated process)

These steps sound fairly simple, so I asked David what some of the more difficult or challenging things are that he sees when undertaking these steps with his customers. David indicated that there are challenges specific to each industry, but some common ones to watch for are:

Lack of executive sponsorship across functions (Very Key!) The drive to implement change must come from the top and be a collaborative process.

Miss-aligned performance measures that drive the wrong behaviour.

Too much granularity or unnecessary detail in the financial plan. Requests for more detail and more clarifications lengthens the process (without sufficient benefit) taking too much time and effort.

Simon shared his experience working with a large UK based motor car manufacturer – the challenges and success they had experienced.

Car manufacturers are a more traditional type of company with lots of legacy systems. Being so entrenched in these systems meant that they were not sure if they were really ready for a big bang approach to integrated planning and forecasting. They, therefore, decided to work on one area of the company at a time – in waves – so they could prove it was the right thing to do by demonstrating success and showing value to drive further change.

I asked David how real the benefits were that could be obtained through integrated planning and forecasting. David said that he sees real results in more accurate forecasts and a much better understanding of what goes on in the business, how it behaves, and the impact each business function has on delivering the optimal level of profit. These are real and tangible benefits. Individual functional areas need to understand their role in the overall plan and not behave independently.

What can organizations do today to evaluate their planning and forecasting processes?Simon suggested the following:

Look at your existing processes – are they collaborative and integrated?

How accurate are your forecasts? If you are not sure, take a retrospective look and find out.

How effective are the different business functions in forecasting accurately?

Take a look at benchmarks and case studies outside your organization and see how you measure up and what else you can achieve.

If you are in the spreadsheet world, re-evaluate the process and take an honest look at how it is working for you. How accurate are your forecasts?

It became quite apparent from speaking to David and Simon that it’s all about optimizing the business as a whole and not the individual parts; without enterprise planning integration, this is simply not possible.

Monday Feb 25, 2013

On February 14th Gartner released their 2013 Magic Quadrant for Corporate Performance Management Suites report. In the report, Oracle was recognized as a Market Leader for the sixth consecutive year.

Gartner’s Magic Quadrant reports position vendors within a particular quadrant based on their completeness of vision and ability to execute. In this year’s report, among the market leaders, Oracle is positioned with the highest ability to execute and the strongest in completeness of vision.

Here’s an excerpt from the report with some comments about Oracle from Gartner:

“Oracle is a Leader in CPM suites, and the Hyperion brand is respected by finance executives worldwide. Oracle has a very broad and deep CPM product suite, which employs a multiproduct approach with different applications for each of the major CPM processes; however, these products employ a common foundation and administrative components. The vendor has a well-established partner channel and Hyperion skills are plentiful among the consultant community, given the well-established products.”

Oracle Hyperion Performance Management Applications are part of Oracle Business Analytics, which combine market-leading enterprise performance management applications with business intelligence tools and technology and analytic applications to help organizations strategize, plan and optimize business operations and achieve better business outcomes.

Wednesday Feb 13, 2013

Tax provisioning is a process that has become increasingly more complex to perform, but increasingly more important to do well.I recently interviewed Andy Oliver, a PWC Director in their Tax Practice and an expert in Tax Provisioning, in a Podcast which I feel sheds some light on this increasingly complex matter. To listen to the Podcast, click here.

Tax provisioning is the process of reporting current and deferred income taxes in a company’s financial statements – tax on current profits and estimated future tax on future profits. There are a myriad of rules and requirements for calculations and disclosure that apply to different companies and countries and they are changing all the time. It is extremely important to have accurate, transparent calculations as when and what to pay and defer can make a huge difference to a company’s bottom line.

How do most tax accountants and departments manage this process? Andy indicated that a majority of companies pull this information together through numerous and large spreadsheets with complex and convoluted calculations. And although these spreadsheets offer flexibility – to keep up with the ever changing rules – they do not provide consistency in calculations, standardization of the process, or data security. This means that the calculations and resulting reports are error prone and can cause countless hours of work to find and correct the errors.

Ideally, the tax provisioning process should be performed early in the financial close process to get a really good picture of the end result. However, inevitably being early in the process means the financial results will change and the provision or estimation will have to be recalculated. Having the tax provisioning process integrated with the financial close process and systems makes a lot of sense, from an efficiency standpoint, to reduce the amount of work required each time there is a change to the financial results.We also discussed how important it is to SIMPLIFY the tax provisioning process and then standardize and automate the process before integrating with the financial close process to be truly effective and world-class.

Oracle’s Hyperion Tax Provision solution was designed to provide this integration with the financial close process and drive efficiency into the tax provisioning and disclosure process.

Finally, Andy had this advice for the listeners, “If you can align the tax reporting process with the financial close process – eliminating much of the manual, spreadsheet-based calculations, you will get the job done quicker, experience fewer mistakes, and be able to spend more time doing the important part of your job as a tax accountant; analyzing the numbers, and providing insight on the results such as WHY the numbers are different from forecast or from last year.

For more information on the Oracle Hyperion Tax Provision solution, click here.

Thursday Jul 19, 2012

A few weeks ago in June 2012, thousands of diplomats, world leaders, executives of corporations, institutional investors as well as social and environmental activists gathered in Rio de Janeiro for the U.N. Conference on Sustainable Development, a.k.a. Rio +20 Earth Summit.Among the agenda items discussed was corporate sustainability disclosures - and although a global agreement was not reached on this topic, there was some progress made here.

While over 2000 organizations already have registered sustainability reports with the Global Reporting Initiative (GRI), and more than 3000 organizations have submitted their environmental information to the Carbon Disclosure Project (CDP), investors are pushing for more consistency and global standards in environmental and sustainability reporting and standards are being defined for integrating sustainability reporting with financial reporting.

Towards this goal, the Nasdaq OMX Group Inc. joined stock exchanges in Sao Paulo, Johannesburg, Istanbul and Cairo in an effort to require listed companies to report material information about environmental, social and governance risks.

Also at the conference, UK deputy prime minister Nick Clegg revealed a government mandate that will force companies listed on the London Stock Exchange’s main market to publish the full details of their greenhouse gas emissions.What this means is that all LSE-listed businesses will have to report total greenhouse gas emissions for the year beginning April 2013. The regulations will be reviewed in 2015, before ministers decide whether to extend the approach to all large companies starting in 2016.

By encouraging companies to take social and environment dimensions into consideration, and by helping investors to make socially responsible decisions, the exchanges are hoping to enhance transparency of information in capital markets and help create more aware investors.

These exchanges agreed to urge their more than 4,600 listed companies to measure and report on environmental and governance issues such as greenhouse gas emissions, water usage and gender equality, or explain why they won’t. They are also asking more exchanges to join the effort.

So again, while a global standard was not agreed upon at the conference, some progress was made in getting additional stock exchanges to require or encourage listed companies to provide more disclosures to investors and other stakeholders about the environmental and social impacts of their organizations, in addition to their financial results.These initiatives are positive steps towards the adoption of “integrated reporting”, or the alignment of sustainability reporting with financial reporting which I covered in a prior article on this blog.See link here:

Friday Jul 13, 2012

The finance department in most organizations is coming under increasing pressure to transform and streamline the financial close and reporting function while continuing to maintain the integrity of the financial statements and close process. A key part of this close process includes the completion of detailed account reconciliations, which can be a major bottleneck and headache in the close process. The necessity for understanding and certifying an account balance and its transactions is prompted by regulatory and audit control requirements. In addition to the statutory pressure for account reconciliations, the current economic situation makes it imperative for Finance executives to understand the details and transactions behind every account. They need to be able to easily identify fraudulent, improper and excessively aged transactions. In most organizations, the account reconciliation process is a very time consuming and manual process. A robust and integrated account reconciliation software applicationwill allow Finance to more effectively manage their business.

Account Reconciliations Can Extend the Financial Close and Introduce Risk

Medium to large organizations often have the need to perform thousands of account reconciliations during the quarter-end or month-end close.Examples of the typical reconciliations include tying general ledger balances to sub-ledger balances, general ledger balances to bank account balances, general ledger balances to data warehouse balances, and consolidation application account balances to general ledger account balances.Most organizations also maintain reconciliations of general ledger balance sheet accounts such as prepaid expenses or accrued liabilities.

This tedious process is typically performed in Microsoft Excel, where Finance staff manually tie out the list of items in a spreadsheet to those in the general ledger and other systems.Managers usually send emails or make phone calls to track progress and follow up on delinquencies.Due to the challenges in tracking account reconciliations, companies typically prepare and review most reconciliations on the same schedule and are often not factoring in risk when determining frequency and due dates.Common failure points include:

- Missing or lost reconciliations

- Unreconciled accounts

- Improper use of roll-forwards

- Reconciliation of the wrong balance (balance changed after certification)

- Insufficient justification or documentation

When these failures occur, audit findings can result in a significant deficiency or a material weakness in internal control, and costs can reach the hundreds of thousands, or even millions of dollars.

Leading edge Finance organizations are now looking to eliminate spreadsheets and manual processes used to support account reconciliations, and adopt packaged software applications designed to automate and streamline the process.But it’s not enough to have a packaged software application to support account reconciliations, this application should also be integrated with financial close workflow, and the various systems in which account balances and transaction detail reside, such as financial consolidation applications and specific general ledgers.Key features in account reconciliation software packages include:

- Currency translation

- Audit controls for all activities

- Reporting and Monitoring

- Pushback of reconciliation adjustments to source systems

- Rule based thresholds for automatic certification and risk assessments

- Workflow support for reconciliation process

- Tasks and task assignments

The key benefits of integrated and packaged account reconciliation software packages include efficiency gains as well as reduction in risk to Finance organizations.Efficiency gains can be measured by the value in labor savings achieved by making the administration, preparation, and review of account reconciliations more efficient.Reduction in risk can be measured by the avoidance of costs associated with a failure in internal controls around account reconciliations.If material weaknesses are found and announced in external audits, the consequences can be costly.Companies incur expenses for additional legal and audit fees and there can be an impact on the stock price for publicly-held entities.

In summary, with increasing pressure to reduce close times and improve the integrity of financial reporting, Finance departments need to eliminate spreadsheets and manual processes and adopt technologies that can help automate and streamline the financial close process and eliminate the chances for errors, omissions and fraud.Integrated and packaged account reconciliation software applications can help alleviate a major bottleneck in the financial close process, increase accuracy and reduce risk, and can complement existing investments in financial consolidation, financial reporting, financial close workflow and transaction processing systems.

Here’s a link where you can find information about how the new Account Reconciliation Manager feature in Oracle Hyperion Financial Close Management can help make account reconciliations less of a headache:

Tuesday May 29, 2012

There hasn’t been much news lately about the adoption of IFRS in the United States, and I have received some questions from customers and partners on this topic.So here’s a quick update.

Most of the world has moved to International Financial Reporting Standards (IFRS) with the last holdouts being Japan, India and the United States.Japan has started the transition process and should be complete by 2015 and India will be in transition through 2018.The Financial Accounting Standards Board (FASB) has been discussing and working with the International Accounting Standards Board (IASB) on the convergence of US GAAP and IFRS for many years.The reality is that the United States Securities and Exchange Commission (SEC) is not going to force a switch entirely over to IFRS, but is proposing a slow convergence of US GAAP with IFRS principles over time.In fact the latest word being used to describe this process is “condorsement”, as per a proposal issued by the SEC in May 2011.

There are a number of convergence projects now being worked on between the two standards committees, but the four that are in focus currently relate to Financial Instruments, Revenue Recognition, Financial Statements and Leases. Exposure drafts on these topics were released for public comment back in 2010 and SEC board reviews occurred in 2011.The expected timeline for adoption of the revised US GAAP rules in these areas is highlighted below.

Revenue:Exposure draft closed, comment period over, the boards are mulling the exact wording.This is expected to be finalized in late 2012.Effective date unknown – but not likely until 2015, with retroactive reporting back to 2013.

Leasing:Principles established, exposure draft still being finalized.Anything that meets the definition of a lease will be on the balance sheet as a right to use asset and a lease liability.P&L expense will distinguish the interest element from the usage element.Some issues still to be resolved.This is expected to be finalized in 2013.

Financial Statement Reporting: Postponed indefinitely.

Financial Instruments:Progress, dialogue this year between FASB & IASB.Basel III, Dodd-Frank, JPMorgan Chase, Greek exposure all factors in getting this one done.No final dates at this point.

The SEC has not made their announcement, but everyone is pretty certain that what they will do is ask the FASB to expose the IFRS statements, other than the 4 convergence ones listed above, as ASUs (Accounting Standards Updates) to US GAAP: that is, FASB will adopt IFRS, not companies.Companies will then adopt the IFRS statements as US GAAP Updates as FASB rolls them out, but absolutely no details are available on that program currently.

Oracle has staff carefully tracking these developments and provides features and capabilities in our financial management applications designed to help customers migrate smoothly from their local GAAPs to IFRS.For news and updates on US GAAP/IFRS convergence projects, please consult the following resources:

Wednesday Mar 28, 2012

Here's an update on what’s new with XBRL and how it can actually benefit your organization versus adding extra time and costs to financial reporting. On February 29th (leap day) of 2012 I attended the XBRL and Financial Analysis Technology Conference at Baruch College in NYC.The event, which attracted over 300 XBRL gurus and fans was presented by XBRL US, The New York Society of Security Analysts’ Improved Corporate Reporting Committee, and Baruch College’s Robert Zicklin Center for Corporate Integrity.The event featured keynotes from the U.S. Securities and Exchange Commission (SEC), and the CFA Institute as well as panels covering alternative research tools and data, corporate reporting to stakeholders and a demonstration of XBRL analysis tools.The program culminated in a presentation of the finalists and the winner of the $20,000 XBRL Challenge.

Some of the key points made in the sessions included:

The focus of XBRL tools is moving from production to consumption.

As of February 2012, over 9000 companies are reporting in XBRL, with over 10 million facts filed to date

XBRL taxonomy extensions have dropped from 27% to 11% making comparisons easier

The SEC reports that XBRL makes it easier to analyze disclosures, focus on accounting issues

XBRL is helping standards-setters like the FASB speed their analysis of impacts of proposed accounting rule changes

Companies like Thomson Reuters report that XBRL is helping speed the delivery of data to clients

The most interesting part of the program though, was the session highlighting the 5 finalists in the XBRL Challenge competition and the winning solution.The XBRL Challenge was launched in 2011 as a means of spurring the development of more end-user tools to help with the consumption of XBRL-based financial information.Over an 8-month process handled by 5 judges, there were 84 registrants, 15 completed submissions, 5 finalists and one winner of the challenge.All of the solutions are open-sourced tools and most of them focus on consuming XBRL-based data.The 5 finalists included:

Calcbench – XBRL data analysis tool that can be embedded in other web applications.This tool can combine XBRL filings with real-time market data.

XBRL to XL – allows the importing of XBRL data into Microsoft Excel for analysis, comparisons.Users start on the web and populate Excel with XBRL data.

XBurble – allows users to search and view XBRL filings, export to Excel, merge for comparison, and includes a workflow interface.

The winner of the $20,000 XBRL Challenge prize was CalcBench.More information about the XBRL Challenge and the finalists can be found at www.XBRLUS.org/challenge

XBRL for Sustainability Reporting – other recent news on the XBRL front was the announcement by the Global Reporting Initiative (GRI) of an XBRL taxonomy for Sustainability Reporting.This taxonomy was co-developed by the GRI and Deloitte and is designed to make the consumption of data found in Sustainability Reports much easier.Although there is no government mandate to file Sustainability Reports in XBRL format, organizations that do use the GRI guidelines for Sustainability Reporting are encouraged to tag and submit their data voluntarily to the GRI – who will populate a database with Sustainability Reporting data and make this available to the public.For more information about this initiative, you can go to the GRI web site:www.globalreporting.org.

So how does all of this benefit corporate filers and investors?Since its introduction, the consensus in the market is that XBRL has mainly benefited the regulators and investment analysts who need to consume and analyze large volumes of financial data.But with the emergence of more end-user tools for consuming and analyzing XBRL-based data, and the ability to perform quick comparisons of one company versus its peers and competitors in an industry group, will soon accelerate the benefits to corporate finance staff, as well as individual investors.This could apply to financial results tagged in XBRL, as well as non-financial information such as Sustainability Reporting – which over the long-term will likely be integrated with financial reporting.And as multiple regulators and agencies in a country adopt the XBRL standard for corporate filings, more benefits will accrue as companies will be able to leverage one set of XBRL-based financial data for multiple regulatory filings.

For more information about the latest developments in XBRL, check out the XBRL US or XBRL International web sites:www.xbrl.org, www.xbrlus.org.

For more information about what Oracle is doing to support XBRL, here are some links:

Wednesday Mar 21, 2012

Business Analytics, which includes Business intelligence and Enterprise Performance Management, are top priorities for IT and Finance executives in 2012.Some of the hot market trends and topics include managing big data, mobile information access, in-memory computing, advanced analytics, predictive modeling, leveraging unstructured data, as well as risk and performance management.

Find out what Oracle is doing about all of this, and what’s new from the market leader in Business Analytics by attending our live webcast event on April 4th titled “Introducing Oracle’s Business Analytics Strategy”.At this event, you’ll hear about Oracle’s strategy for Business Analytics from Mark Hurd, Oracle President and you can learn about the latest advancements in Oracle’s Business Analytics solutions from Balaji Yelamanchili, SVP of Analytics and Performance Management.

The keynote session from Mark and Balaji will be followed by breakout sessions that provide a more in-depth look at what’s new in specific product areas including the latest release of Oracle’s Hyperion Enterprise Performance Management suite, Oracle Business Intelligence Applications and Exalytics In-Memory Machine, Oracle Endeca Information Discovery, Big Data and Advanced Analytics solutions.

This event will provide a great opportunity to hear about what’s new in Business Analytics at Oracle, and for attendees to pose questions to Oracle experts during live chat sessions.Here’s a link to the registration page, and more details about the April 4th event.We hope to see you (virtually) there!